7. Consider the tax schedules below: Marginal tax rate Income bracket Schedule 1 Schedule 2 Schedule 3 The 1st $1000 10% 10% 10% The 2nd $1000 10% 20% 20% The remainder 10% 20% 30% (a) Draw the budget lines under the three tax schedules in one diagram. The vertical axis is a consumer good (c) while the horizontal axis is pre-tax income (y). Assume price of the consumer good p 1. In the diagram, you should indicate the numerical values of consumption at pre-tax income levels of $1000, $2000 and $3000 respectively under the three tax schedules. = (b) Do you think a change from Schedule 2 to Schedule 3: (i) implies the schedule becomes more or less progressive? Explain by providing the definition of "progressivity".